The 10-second takeaway
For the quarter ended June 30 (Q2), Rosetta Stone missed estimates on revenues and met expectations on earnings per share.
Compared to the prior-year quarter, revenue dropped and GAAP loss per share didn't move.
Margins contracted across the board.
Rosetta Stone notched revenue of $60.8 million. The four analysts polled by S&P Capital IQ expected revenue of $66.0 million on the same basis. GAAP reported sales were 8.9% lower than the prior-year quarter's $66.7 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at -$0.15. The four earnings estimates compiled by S&P Capital IQ anticipated -$0.15 per share. GAAP EPS of -$0.22 were the same as the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 81.4%, 130 basis points worse than the prior-year quarter. Operating margin was -8.3%, 10 basis points worse than the prior-year quarter. Net margin was -7.5%, 70 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $61.5 million. On the bottom line, the average EPS estimate is -$0.16.
Next year's average estimate for revenue is $271.7 million. The average EPS estimate is -$0.21.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 698 members out of 788 rating the stock outperform, and 90 members rating it underperform. Among 154 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 135 give Rosetta Stone a green thumbs-up, and 19 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Rosetta Stone is hold, with an average price target of $12.33.
Software and computerized services are being consumed in radically different ways, on new and increasingly mobile devices. Many old leaders will be left behind. Whether or not Rosetta Stone makes the coming cut, you should check out the company that Motley Fool analysts expect to lead the pack in "The Next Trillion-Dollar Revolution." Click here for instant access to this free report.
- Add Rosetta Stone to My Watchlist.
Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of Rosetta Stone. Motley Fool newsletter services recommend Rosetta Stone. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.